The first time I had to deal with the intricacies of International Reference Pricing, I was in charge of the Global Forecasting team at of a top 5 pharmaceutical company. Up until that point, my team’s interactions with the Global Pricing team had always been courteous and straight-forward. Please provide us three assumptions: the yearly price of our in-market and pipeline products, the expected list price year-on-year decrease in all the major countries we were forecasting (e.g. -4% every 2 years in Japan), and an average gross-to-net factor to get to net sales. To be very candid, the Global Pricing team rarely got any feedback or input from us.
I remember the day when a Global Pricing Director explained to me the broad concepts of International Reference Pricing, and that my team was required to develop an Excel-based tool to develop a myriad of scenarios based on product launch dates, product launch prices and a seemingly complex algorithm made of IF statements and hard-coded parameters (little did I know!).
Today, after having interviewed many Pharma Global Pricing strategy experts, I notice that despite being under the same set of rules, most of the top 50 pharmaceutical companies approach the problem with a different angle. What’s more, most still struggle to effectively answer some of the multi-million dollar questions posed by International Reference Pricing.
In most cases, this is due to the history of the teams I talk to. A backbone pricing database was created long time back. An Excel-based price analysis tool was created by pricing analysts on top of it. The referencing matrix is defined in Lotus Notes to foster international collaboration. A courageous team of MIT PhDs tried to develop a statistical solution to launch sequencing optimization. A separate price event tracking tool feeds into this. In the middle of it all, a Global Pricing team with less and less bandwidth and/or body counts, working until late into the night to copy and paste the data over, enter scenario inputs manually, run unoptimized scenario calculations and update reports and slides.
Now that price referencing has spread well beyond Europe (with more countries jumping on board each year), that governments impose more frequent price reporting and price reviews, that they get more creative in terms of rules (second lowest EU country price in Slovakia) and in terms of their application, I believe it is time to strongly advocate for a holistic, productized, customizable, easy-to-use approach to International Reference Pricing.
All in one box! Data integration with all base systems, communication and approval workflows, user-friendly interface, master data management (including rules and price events), exception management, optimized run times, pre-built report and ad-hoc analytics to answer "the next question”, access to Global, Region and Country teams to capture local nuances, rights managed in-tool by a handful of admins. All in one box. Are we as an industry ready for it?
Comprehensive, Interactive Rules Management